STILLWATER — An audit by the Office of the State Comptroller has revealed the village unnecessarily increased its 2017-18 tax levy by 21 percent.
The audit, which looked at village finances from April 21, 2009, through April 30, 2017, determined that the five-member Village Board overrode the 2017-18 property tax levy limit to boost the tax levy, despite the fact that the village’s unassigned fund balance was substantial enough to fund village operations for nearly two years without a tax levy increase.
The tax levy — the total amount being raised through taxes — increased from $295,371 during the 2016-17 budget year to $358,381 for 2017-18.
Mayor Frank Tatum said the board was initially going to increase the tax levy by a smaller amount but felt a higher increase was necessary.
“We thought we were doing 18 percent, which is sizable enough, but we generally don’t have enough money left to pave the roads,” he said. “Every year when it came time to pave the roads, we could only do one.”
Village highway fees increased by $4,000 from 2016 to 2017, while larger funding increases over that time period were for increased benefits costs for the Village Board, mayor and employees.
Tatum, who previously served as deputy mayor, became mayor in September after former Village Mayor Rick Nelson resigned following his arrest on child pornography charges.
The Division of Local Government and School Accountability conducted the audit to determine whether the village’s water supply capital project and settlement proceeds from a related lawsuit were accounted for and monitored.
In addition to increasing the tax levy, the audit found the clerk-treasurer overstated the general fund operating surplus and fund balance for 2014-15 by $420,641 as water fund transactions were put into the general fund instead of the water fund.
The general fund total increased from $779,800 during the 2016-17 budget year to $837,800 for 2017-18.
The audit also stated that Village Clerk-Treasurer Sheristin Tedesco did not appropriately account for water-related expenditures or the $4 million the village received from a 2014 settlement from General Electric.
The village, along with the towns of Stillwater and Waterford, filed a lawsuit against GE in 2009. Those municipalities previously drew drinking water from the Hudson River or nearby wells. When GE announced its Hudson River PCB dredging project, the municipalities felt they should be compensated for the cost of making other arrangements for their drinking water.
Tatum said the village had to hook into the county water authority as a result of the dredging project.
“The settlement money has been moved back into the water fund because it’ll be spent there,” he said. “Our water tank is from 1937, so it’s just a matter of when we’ll spend it.”
“I’ll have my office work closely with the board and mayor to keep learning and moving forward to provide the most benefit for the residents in the Village of Stillwater,” Tedesco said.
The Office of the State Comptroller recommended Tedesco attend training for governmental accounting and record keeping. The village should also correct the accounting errors identified in the report and resubmit related annual update documents, as well as periodically reviewing the clerk-treasurer’s financial records to ensure accuracy.
Brian Butry, deputy press secretary for State Comptroller Thomas P. DiNapoli, said the last audit of the village was completed in 2000.
He added that Stillwater was required to submit a corrective action plan 90 days from the day the most recent audit was issued.
“This should outline how the village plans to address the recommendations contained in the audit,” Butry said. “And we always reserve the right to conduct a follow-up audit to determine if those recommendations have been implemented.”
In Tatum’s letter of response, which is included in the audit report, the village agreed to comply with the recommendations from the Office of the State Comptroller, including that the board will prepare and review budget-to-actual reports for future capital projects, utilize interfund transfers for water-related operations, and that the clerk-treasurer will attend governmental accounting, accounting and record-keeping training.
Tatum said the audit served as a teachable moment.
“The way we were doing things wasn’t wrong, but it wasn’t the preferred way to do it,” he said. “They talked about making adjustments, and we agreed to that. We have nothing to hide.”